A bridge loan is a short-term senior facility used to cover funding gaps in time-sensitive property transactions. Common in UK property development finance, it typically funds acquisitions, planning gains, or exits ahead of development or sale. These loans are secured with a first legal charge and usually offered with rolled-up interest or retained interest structures. Terms are often 3–18 months and require a clearly defined exit strategy such as refinance, sale, or drawdown of a development facility. Speed of execution and asset value are key to lender appetite.
Within the capital stack, a bridge loan typically sits in the Senior Debt 1st Charge position, giving the lender priority over the asset and any subsequent funding. While structurally similar to a Stretch Senior Loan, it is distinguished by its short-term, event-driven nature and reliance on a defined exit rather than ongoing project cash flow. The facility is documented through a Loan Agreement that sets out repayment triggers, default provisions, and security enforcement rights. In practical terms, developers and lenders closely monitor Drawdown & Repayment Profiles to ensure the timing of capital deployment and exit aligns with the agreed strategy.
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